Clean Fuels for ShipsPractical Solution for

MARPOL Annex VI and GHG Emissions Reduction

MARTECMA Seminar

21 January 2008

AthensDragos Rauta - INTERTANKO

Transport Mode Efficiency(assumes Aframax Tanker burning 2.6% Sulfur Fuel

with return voyage in ballast)

Energy Use Aframax Rail Truck Air(kW h / t km) Tanker (Diesel) (Boeing 747)

0.01 0.07 0.18 2.00

Emissions Aframax Rail Truck Air(g / t km) Tanker (Diesel) (Boeing 747)

NOx 0.15 0.35 0.31 5.69

SOx 0.10 0.01 0.01 0.17

PM 0.01 0.01 0.01 n/aCO2 5 17 50 552

•Shipping is the most efficient mode for moving cargo

Source: Herbert Engineering, April 2007

Transport Mode Efficiency

One litre of fuel used to move one tonne of oil on a VLCC more than 2,500 km.’This is more than twice a 20 years ago.

Sulphur limits in modes of transportations

Source: European Environmental Agency

4.50%

1.50%

0.1%

0.001%

Source: IEA MEDIUM-TERM Oil Market Report – July 2007

Sulphur limits in land transportation

The choices to MARPOL Annex VI

Solution1. HFO with abatement technologies2. Cleaner fuels = LSFO or Distillate

Application1. Globally*2. Locally/regionally*No SECAs, no fuel switch over, no complicated bunker

storage systems, no responsibility to find the right fuel for the right region, no responsibility to prove compliance on fuel switch over or on operating abatement technologies and disposal of waste, no fuel treatment: minimal sludge, little to incinerate & minimal waste to handle and dispose

12%

17%

22%

27%

32%

37%

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

Mdl distil. - % share

Fuel oil - % share

Total HFO Supply vs Marine HFO demand

0

100

200

300

400

500

600

700

Year

Sup

ply/

dem

and

(mt)

324

586

HFO supply – constant decrease

HFO demand – constant growth

??

REFINERY PRODRUCT STREAMSSource: Shell Guide

~7% ~8% to supply

the additional

MDO

Exhaust Gas ScrubberCase Study

• Scrubbers installed only on 50% (18 MW) of the engines onboard

• Dimensions– ME 12 MW: 3.80 m diameter x 11.2 m height– AE 3.2 MW: 1.85 m diameter x 5.98 m height– AE 2.4 MW: 1.40 m diameter x 4.90 m height

• New funnel• Cost

– US$5.6 m for equipment – US$0.5 m transportation cost of the units– US$1,3 m for installation– US$0.9 m/year operational costs

Exhaust Gas Scrubber DevelopmentCase Study

• 260 kW to run the scrubbers – more CO2

• Scrubbing water - 16 t/h/MW to remove 1.0%S

• Key factor is "back pressure"; the main engine is utilised with an economizer and placing the scrubber behind/before this economizer would generate too much back pressure for the main engine thus the economizer would need to be removed

• SECA operations:– 1.0% S cap = HFO to be used < 2.5% S – 0.5% S cap = HFO to be used < 1.25% S– 14,000 t/day of seawater + > 5,000 t/day for dilution

to restore the water pH

Distillates – The Benefits

• Applies to existing ships/engines, as well as new

• With no other measure, immediately reduces:- SOx emissions by 80 to 90 %- PM emissions by 90 %- NOx emissions by 10 to 15 %

• Facilitates further NOx reductions by in-engine modifications (for IMO’s Tier II & III)

• Facilitates further improvements in energy efficiency (and GHG reductions)

• Improves engine reliability

• Reduces onboard fuel generated waste

Cleaner, Simpler and more Efficient

ships

Distillates – The Benefits

• Reduces onboard plant and maintenance

• Reduces workload for ER crew by 70%

• Provides safer working environment for ships’ staff and shore side workers

• Avoids carriage of multi-fuels and fuel blending/switching problems

• Reduces control and monitoring requirements

• Lessens harmful impact of bunker spills

• Lowers burden for crew

Cleaner, Simpler and more Efficient

ships

The CO2 Equation

CARBON NEGATIVE

• SOx deposits in Ocean

• CO2 buffering by sea water (scrubbing or not)

• Energy required to run scrubbers

• Energy required to produce LSFO/Distillates

CARBON POSITIVE

Burning Distillate vs HFO• Low sulphur – little or no

CO2 from buffering• Lower fuel consumption

• No pre-treatment

• No post-treatment required of fuel wastes

• No sludge, no incineration

• Fuel efficient new engines

The Cost Issue

MDO/DMB grade 0.5%S• Refineries investment for distillate globally

US$126 bn (2020)• For 10 year recovery + associate costs =

US$40 to US$80/t• Premium paid today: US$300/t• Refinery efficiency = Less HFO supply

SCRUBBERS• 60,000 ships x US$5m/ship = US$300 bn.• Large installations = retrofitting not possible• Time to retrofit = 7 years or more

Conclusions on Global 0.5% S MDO

• Solid platform of requirements

• Long term and positive reduction of air emissions from ships

• Long term and a predictable regulatory regime

• Prevent fragmented regulations

• A global standard for at sea, coastal and at berth operations (no SECAs)

• Realistic and feasible solution

Conclusions on Global 0.5% S MDO

• Regulations based on a fuel standard rather than an emissions performance standard only

• At least carbon neutral, probably carbon positive, i.e. net beneficial effect

• Leaves open options for better solutions for NOx and CO2 emissions

• Better to deal with the cause of a problem than to concentrate on the effects only!

QUALITY PROBLEMS WITHRESIDUAL MARINE FUEL OILS

• HIGH ABRASIVE FUELS• HIGH ASH• LOW FLASH POINT• HIGH SEDIMENTS• HIGH DENSITY• FUELS CONTAINING USED LUBE OILS• POLYETHYLENE CONTAMINATION• POLYSTYRENE CONTAMINATION• HIGH CALCIUM & HIGH SODIUM• HIGH WATER CONTENT• CONTAMINATED FUELS• INCOMPATIBILITY OF BLENDS

ALL these avoided with use of MDO

GHG Emissions

• GHG emssions & solutions– HFC: reduce use & no leakages– O3 (NOx & VOC):

• NOx: MDO + in-engne solutions• VOC: KVOC + VOCON valve/procedure

– CO2:• MDO – higher energy/kg than in HFO• Measure to minimise the energy used

• GWP (gobal warming potential)– CO2 = 1; - O3 = ~ 20; - N2O = 310; – HFC-23 = 12,000; - HFC-134a = 3,830

Measures for GHG Redcution

• Reduce heat losses

• No unecessary operations, e.g. no tank cleaning between same cargo

• Cargo filling – 98%

• Minimise/no waiting time in port

• Reduce ballast legs

• Carbon capture

Measures for GHG Redcution

• Larger ships• More efficient engines – LS MDO/MGO required• Smoother hull surfaces - (silica/nano-

technology, air skirts; seachests shape; hull weld protrusions, other protrusions)

• Reduced wave resistance• Reduced hull resistance (non biocidal AF

paints are proposed - they slime bad; the cost of slime in terms of drag is under researched; hard hull cleaning versus soft slime brushing ... benefits, cost and drawbacks .. )

Measures for GHG Redcution

• Improved propulsive efficiency (propellers, smoothness, cleaning ... position ; rudders, shape ... position .... relation to position of propeller ..)

• Composite materials• "Air friction" to reduce drag - WAIP (Wing

Air Induction Pipe) technology (would the degree of drag reduction due to air bubbles be sufficient to overcome the increase of drag by injectors/protrusions of such a system?)

Questions?

dragos.rauta@intertanko.com

Anti-Trust/Competition Law Compliance Statement

INTERTANKO’s policy is to be firmly committed to maintaining a fair and competitive environment in the world tanker trade, and to adhering to all

applicable laws which regulate INTERTANKO’s and its members’ activities in these markets. These laws include the anti-trust/competition laws which the

United States, the European Union and many nations of the world have adopted to preserve the free enterprise system, promote competition and protect the public from monopolistic and other restrictive trade practices.

INTERTANKO’s activities will be conducted in compliance with its Anti-trust/Competition Law Guidelines.